Keystone Pipeline Means Dearer Gas, Few Jobs

Tags

“I’ll get us that oil from Canada,” Mitt Romney said in his victory speech after the Michigan primary. He was referring to Keystone XL, the crude-oil pipeline that has become a top-tier campaign issue for Republicans.

Problem is, the tar-sands oil in that pipeline wouldn’t be coming to “us.” It would go directly from Canada to refineries in the Gulf region en route to export markets in Latin America and Europe. The U.S. would be used as little more than a transit corridor.

We’ve heard a lot about groundwater contamination near the completed portions of the pipeline — more than a dozen spills of the highly corrosive oil, including one near Kalamazoo, Michigan, that they can’t seem to clean up. Conservative Nebraskans became greens overnight when they learned the details of the project that will go through their state.

But the immediate effect of completing the Keystone pipeline (perhaps by 2015) is more surprising and counterintuitive.

The project would increase domestic oil prices by more than $6 a barrel and prices at the pump in parts of the country by about 20 cents a gallon. You read that right. At a time when rising gas prices threaten President Barack Obama’s re-election, the Republicans’ most ballyhooed remedy — a new pipeline — would make the problem worse.

Before I explain why, here’s a little background on Keystone’s other practical shortcomings beyond its broader threat to a clean energy future.

The same Republicans who opposed the auto bailouts that saved about 1.5 million jobs (according to the Center for Automotive Research) claim that Obama’s delay of a decision on Keystone until after the election is a travesty because it’s a “job-killer.”

The president’s announcement in January that he would punt was highly political; he didn’t want to offend environmentalists in the Democratic base. But it’s a myth to say unemployment will rise as a result. TransCanada Corp., the company building the pipeline, initially estimated that the project would create “a few hundred” permanent jobs. The State Department put the number at 20. Experts I consulted say that maintenance of the specialty pipe used in Keystone is more complicated than the State Department figures indicate. Presumably the refineries processing the additional oil might add some jobs. So the total number of permanent jobs could perhaps be closer to 1,000.

Knowing that such paltry figures would harm their efforts to sell the project to the U.S. public, TransCanada underwrote a study by an outfit called the Perryman Group claiming that Keystone XL will create 119,000 total jobs. But according to a report by the Cornell Global Labor Institute, the Perryman study is bogus. It included the vaguely calculated multiplier effects of $1 billion spent for a section of the pipeline in Kansas and Oklahoma that has already been built and isn’t part of the controversial extension.

The temporary construction and manufacturing jobs created by the project over two years — estimates range from 2,500 to 20,000, depending on how much of the money is spent in the U.S. — would be welcome, but by themselves they hardly justify approval of the whole thing.

The Republicans’ decision to politicize the issue is a perfect illustration of their pound-foolish approach. First they tried to hold up the payroll tax holiday (a proven job multiplier) if Obama didn’t approve Keystone. Now they are applying the same extortionist logic to the transportation bill, which would create hundreds of thousands more jobs than a single pipeline.